By Peter Ricci
Foreclosure sales present significant benefits to potential homeowners, the biggest one being the price – according to the most recent existing-home sales report from the National Association of Realtors, foreclosures sold for an average discount of 17 percent below market value.
And many consumers have been catching on. That same NAR report also found that distressed property sales accounted for a quarter of all home sales in June. As any agent who has worked in foreclosures will tell you, though, foreclosure sales are hardly conventional, and they come with a number of unorthodox features that you must prep clients on. Here are five of the most important:
Foreclosure Sales Tip 1: Expect an Automated Touch
From the start, explain to your clients that they should not anticipate a highly personable selling environment. After all, you’ll be negotiating with a bank that views the property in question as a costly investment on their balance sheets, not a unique component of the American Dream, so make sure your clients are aware of that fact.
Foreclosure Sales Tip 2: Don’t Expect Any Information
Remember what we just mentioned about a de-personalized kind of real estate? That’s especially true when it comes to disclosures and information about the area. Because there is no seller involved, all those wonderful anecdotes that your clients may learn organically – say, the best parks in the area, or the best place to grab a burger – will be nonexistent.
Foreclosure Sales Tip 3: Hope for the Best, Anticipate the Worst
Foreclosures are sad affairs, and some homeowners respond aggressively when they lose their property. A recent Zillow piece on foreclosure sales, for instance, described a San Francisco homeowner who, before leaving his foreclosed home, took with him every appliance, light fixture and even the faucets. Turn-key-ready these properties are not, so mitigate your clients shock by warning them of the possibilities.
Foreclosure Sales Tip 4: Throw Out the Book…and Burn It
Even if your client is an experienced homebuyer and seller, if they have never worked with a foreclosure sale before, they’ll be a fish out of the water when it comes to the processes of the sale. From contracts that are unique to the specific bank to myriad pages of signage excluding the bank from any responsibility for the home, a foreclosure sale is a whole new arena.
There are some irresistible deals out there on the foreclosure market – heck, even a 14-year-old got in on the action earlier this year – but it will be important to notify your clients of the chutes and ladders that are often involved in foreclosure sales.